New York Markets After Hours

Barclays moves higher as U.K. market slips

Dairy Crest gains after unit sale; Hochschild up after strike ends

By

SimonKennedy

LONDON (MarketWatch) -- U.K. shares fell in the final session of the week, though Barclays posted strong gains as worries over its capital position faded.

The U.K.'s benchmark FTSE 100 Index (UKX) fell 0.7%, or 26.35 points, to close at 3,898.85, while other European indexes also declined. For the week, the FTSE 100 gained around 1.5%. Also see Europe Markets.

Bank stocks were mostly higher, with Barclays (BARC)
BCS, -0.39%
jumping more than 24% after the group said it had passed a stress test on its capital position by U.K. regulators.

Barclays said that, following talks with the Financial Services Authority, its capital was expected to remain within the required levels even after further stresses to credit markets and the economy. See full story.

Among other U.K. lenders, Lloyds Banking Group (LLOY)
LYG, -0.84%
rose 10.3%, while HSBC (HSBA)
HBC, -0.38%
trimmed earlier gains to end the day with a 0.3% rise.

Data released Friday also showed that Britain's gross domestic product shrank 1.6% in the final three months of 2008, a slightly worse performance than the 1.5% reduction previously estimated.

BNP Paribas analysts said there were some more significant revisions in the underlying numbers, including a 1% drop in consumer spending, compared to the previous 0.7% estimate.

"Overall, the data show the U.K. in a very weak position at the end of 2008, something that will have persisted into the first half of 2009," BNP Paribas said.

U.S. markets were sharply lower in early trading, after equities had jumped about 8% over the first four sessions of the week.

Outside the banking sector, most other U.K. industries were mixed or lower Friday.

Insurers were broadly lower as they continued to drift back from recent highs. Shares in Prudential PLC (PRU) lost 5.8% and Standard Life (SL) fell 2.3%.

Retailers also declined, with Tesco (TSCO) down 4.1%, Marks & Spencer (MKS) falling 1.3% and Next (NXT) down 1.5%.

The declines followed losses for the sector on Thursday after disappointing numbers from Next and Kingfisher (KGF) among others.

Outside the main index, Dairy Crest Group (DCG) jumped about 15% after it sold its 49% stake in a joint venture with Yoplait Group for 63.5 million pounds, which will help repay debt and substantially increase the available headroom under its banking covenants.

Hochschild Mining (HOC) shares climbed 16.4% after it announced a strike affecting four of its operations in Peru had ended and there would be no impact on its 2009 production targets.

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